What's Powering The 2026 Earnings Comeback? ABSL's Harish Krishnan Has An Answer

India’s corporate earnings are likely to see a meaningful revival in 2026 even as heavy equity supply remains a key overhang, Harish Krishnan, Co-CIO and Head of Equity at Aditya Birla Sun Life AMC, said.

Krishnan said the market has already absorbed many of the negatives that weighed on sentiment in 2025, setting the stage for stronger earnings momentum ahead.

"We do think earnings growth is likely to be revised upwards and there is going to be a stronger earnings growth coming through, primarily because of the tax cuts as well as the GST cuts, not to mention the rupee depreciation," he told NDTV Profit.

"From an earnings point of view, things are looking up," he said, adding that the main concern at present is the 'sheer supply of paper' hitting the markets, which could cap sharp upside.

On currency concerns, Krishnan acknowledged that rupee depreciation remains a near-term challenge for foreign investors. "If you have low double-digit earnings growth in local currency and a 7–8% currency depreciation, you’re better off being in US Treasuries," he said, stressing that clarity on where the rupee settles is crucial.

However, he argued that the current phase of depreciation is different from the past. "India’s macro fundamentals are reasonably strong. This depreciation is more a function of trade negotiations and, in some sense, a release valve to help exporters," Krishnan said.

He also highlighted that a weaker rupee tends to support Indian corporate earnings, noting that a significant portion of India Inc.’s revenues are dollar-linked. "Almost 55–60% of the topline of the top 1,000 companies is dollarised — energy, metals, pharma, IT, auto ancillaries. These are positively impacted by a weaker rupee," he said.

Looking ahead, Krishnan said the combination of tax cuts, GST relief and low inflation could revive consumer demand, which forms nearly 60% of the Indian economy. "The pump-priming of the Indian consumer and the stimulus measures should bring demand resurgence, and that will lift topline growth," he said.

While margins have driven much of the earnings improvement so far, Krishnan expects revenue growth to pick up as consumption strengthens. "Even if margins come off a bit, higher topline growth will be cheered by the markets, which have been worried about subdued revenues for some time," he said.

Watch the entire conversation for more insights: